Private Colleges Now Use Nearly Half of Tuition Revenue for Student Scholarships
Tuition discounting measures the commitment of colleges and universities to use their own resources to help students afford college. Results from the 2018 NACUBO Tuition Discounting Study are based on survey responses from 405 private, nonprofit colleges and universities that were members of NACUBO as of September 2018. The latest survey collected final institutional grant awards and other data for academic year 2017-18 and preliminary estimates for 2018-19, as of fall 2018.
The 2018 results show that the average institutional tuition discount rate – total institutional grant dollars awarded to undergraduates as a percentage of gross tuition and fee revenue – reached 44.6 percent in 2017-18, and is expected to have climbed to 46.3 percent in 2018-19. For first-time, full-time, first-year undergraduates, the rate is estimated to have reached 52.2 percent in 2018-19. The rising discount rates indicate that nearly half the tuition and fee revenue collected from undergraduates at private, nonprofit colleges was used to provide scholarships, fellowships, and other grant-based assistance to students.
Institutional discount rates have risen, in part, because a greater share of students have received institutional grant awards, and the average grant award covers a larger share of the average tuition price. From 2007-08 to 2017-18, the share of first-time freshmen who received an institutional grant or scholarship grew from 81.7 percent to 89.3 percent. Additionally, the average award as a share of the average listed tuition and fee “sticker” price rose from 49.2 percent to 57.2 percent. Since 2008-09, the average published tuition and fee price has increased by about 47 percent, but the average institutionally funded grant award has jumped by 91 percent. This means that the average net tuition rate for freshmen increased by only 18 percent.
These rising institutional tuition discount rates and larger grant awards have led to much slower growth in net tuition revenue. The estimated average change in net tuition revenue (gross tuition and fees minus the value of institutional grants) per first-time, full-time freshmen was -0.8 percent in 2017-18. Net revenue fell by 3.6 percent when adjusted for inflation.
Given the slower growth in net tuition revenue, the TDS survey asked participants to describe the strategies their institutions used or implemented in FY18 to increase net tuition revenue. A majority of institutions said they were focused on recruitment strategies (76 percent), retention strategies (69 percent), and/or financial aid strategies (66 percent).
A press release and podcast episode with more details of the study results is available, and a final report with study results may be purchased from the NACUBO Online Bookstore.